Sixers Up For Sale?

In what can only be described as shocking news, ESPN is reporting the Sixers are not only up for sale, but a deal may be "imminent," to a leveraged buyout specialist.

This could be very good news or very bad news, and it really comes down to the motives of the group doing the buying. Leveraged buyout firms are also known as private equity firms and they were formerly known as corporate raiders. Typically, they specialize in taking over flailing companies who have valuable assets, they use massive amounts of debt to finance the deals, then sell off the company's assets to pay off the loans. At least, that's what they did back in the day. That's what got them the name corporate raiders.

If you talked to their PR staffs, they'd tell you about how they're now in the company rehabilitation business, which they are in a lot of cases. They find mismanaged, undervalued companies, install their own management sometimes, and turn them around before selling them (whole or in pieces).

This could all just be background noise in a possible sale, though. Where the money comes from, or what business the group buying them is in doesn't matter a whole lot. If they have money behind them and the reason for buying the team is about basketball, it could be very beneficial to have smart financial guys running the team. But if this is a case of financial guys seeing an opportunity to make more money, I'm not encouraged. A lot of the time, these guys see market inequities and figure out a way to take advantage of them. In this case, it could be as simple as revenue sharing. "We make x more dollars simply by being under the cap. If we spend y on this player, our financial return would only be z, so we're better off losing a couple more games and saving the money." When equations like that are dictating basketball moves, all hope is lost.

Anyway, it's early in the game so who knows what to make of this news. The guy behind the deal is Joshua Harris, who co-founded Apollo Global Management a huge PE firm. Harris is loaded. The group also consists of another PE guy and Jason Levien, a former player and agent.

Deep pockets, but what's the motivation for buying the team? That's the question I hope the league will ask.